Intrahepatic cholangiocarcinoma (ICC) is a highly malignant, heterogeneous cancer with poor treatment options. We found that mitochondrial dysfunction and oxidative stress trigger a niche favoring cholangiocellular overgrowth and tumorigenesis. Liver damage, reactive oxygen species (ROS) and paracrine tumor necrosis factor (Tnf) from Kupffer cells caused JNK-mediated cholangiocellular proliferation and oncogenic transformation. Anti-oxidant treatment, Kupffer cell depletion, Tnfr1 deletion, or JNK inhibition reduced cholangiocellular pre-neoplastic lesions. Liver-specific JNK1/2 deletion led to tumor reduction and enhanced survival in Akt/Notch- or p53/Kras-induced ICC models. In human ICC, high Tnf expression near ICC lesions, cholangiocellular JNK-phosphorylation, and ROS accumulation in surrounding hepatocytes are present. Thus, Kupffer cell-derived Tnf favors cholangiocellular proliferation/differentiation and carcinogenesis. Targeting the ROS/Tnf/JNK axis may provide opportunities for ICC therapy.